Time for energy

The replacement of Energy Secretary Daniel Cameron by Mariana Matranga this week is rather more than the routine change of a second-line official — it is intriguing for various reasons starting with its timing. And not just because the moment chosen to shift Cameron after over a decade was that “Ruby Tuesday” when almost the entire nation was holding its collective breath until the extra-time, last-minute World Cup victory over Switzerland. Of greater significance in the longer term are two developments whose impact will be clarified in the course of this month in both cases — the New York negotiations with holdout creditors during the 30-day grace period and the mid-July BRICS summit in Fortaleza with the certainty of Chinese President Xi Jinping and Russian President Vladimir Putin coming onto this capital. Because these two developments potentially hold the key to the future face of the international capital helping Argentina to tap its energy resources — largely private-sector investment from developed countries if a holdout settlement does the trick in unblocking global credit markets or funding from two heavyweight emerging markets with a long tradition of state planning if Chinese and Russian presidential visits prove a total success.

There can be little doubt that the Cristina Fernández de Kirchner administration (and in particular Economy Minister Axel Kicillof) would prefer the energy resources to be developed by state planning in alliance with emerging countries if they had any choice in the matter — there can be equally little doubt that should the toss of the coin fall on the side of New York, those possibilities would be enthusiastically embraced because this is a highly pragmatic administration at heart, despite its rhetoric. What would remain intriguing would be the choice of options should the outcome of this month’s events not clearly favour one source of investment over the other or should both results be largely negative.

There is every reason to expect success on both fronts — most people expect a negotiated solution to be found to the holdout problem (when something is necessary, it is usually possible) and Chinese appetite for Argentina’s energy resources is highly logical — but failure cannot be ruled out (remember Hu Jintao’s visit a decade ago with the empty dream of 20 billion dollars while settling with the vulture funds means undoing an especially difficult knot tied by highly unpleasant people). We will just have to see what July brings but it could prove a decisive month in Argentina’s energy history.